Gold Bull Run Coming to an End
December 19, 2013
A recent feature on the Bloomberg website chronicles the demise of a once booming gold mining town in South Africa. The town, Blyvooruitzicht, means "happy prospect" in Afrikaans but the prospects have been anything but happy in recent months.
Gold has suffered a 25% drop in value in 2013 and this is having dire consequences for towns around the world that depend on the mining of the precious metal. The town in South Africa has become a desolate area since Johannesburg-based Village Main Reef, Ltd. cut funding and closes it last summer forcing the layoff of over 1,700 workers.
South Africa is one of the world's richest gold reserves. However, gold's decline this year is the biggest drop since 1981. The gold mining industry eliminated 14,461 positions in the first nine months of the year, bringing the total remaining jobs to 126,587 in September, according to Statistics South Africa, the state statistics agency.
The steady decline in gold prices combined with the rising cost of operations is forcing many gold mining companies to either close underperforming mines or greatly scale back on its workforce. However, when an area is so dependent on a mining operation for its economic livelihood, these decisions cause a ripple effect that can feel like a tidal wave when times are bad. Just as Midwestern towns in the United States rose and fell with gold-prospecting in the 1800's, many towns around the world are seeing the overnight change when their mines are closed.
Though there has been some outside interest in reviving the gold mine in Blyvooruitzicht, many of the laid off workers have already left the town in search of work elsewhere.